Why Keystone Insurers Expanded in Kentucky and Where It’s Going Next

Pennsylvania-based insurance agency franchisor Keystone Insurers Group has more than 200 agency owner-partners and it’s not done yet, says Colin Buzzard, Keystone’s executive vice president of sales and marketing.

Currently, Keystone has agency partners in Pennsylvania, North Carolina, Virginia, Indiana and Ohio. Since January, the franchise operation has added another 14 member agencies – all from Kentucky—and Keystone still expects to add more in Kentucky.

It also has its sights set on a neighboring state.

With property/casualty premiums exceeding $1 billion, Keystone ranks sixth on Insurance Journal’s list of the Top 100 Privately-Held Property/Casualty Agencies. It was founded in 1983.

Buzzard calls Keystone a “facilitator of value,” referring to how it can help each agency increase its worth. That is important to owners because as Keystone members they still own their agencies, their accounts and their policy expirations; Keystone doesn’t own them. In fact, the reverse is true– each partner is an owner of Keystone.

Buzzard is a patient man, which is helpful because the process of finding the right new members is not a quick one. It depends on finding a few core agents and then relying on their recommendations of others.

“I started messing around with Kentucky 18 months ago and over the course of 18 months determined who I thought the better agencies were. That is nothing more than just spending an awful lot of time talking to people,” he told Insurance Journal in a recent interview.

“And my goodness, the recommendations they came with is a who’s who in Kentucky…. [G]reat agencies know who they want. Yes, it might be somebody that they’ve competed with in the past, but they also know that 5, 10, 20 years out, that’s the agency that’s going to make Keystone strong.”

Why Kentucky? Keystone members aren’t interested in expanding in states with negative insurance climates (sorry, Florida). They saw Kentucky as a growth opportunity. Also, there was something else growing in the Bluegrass State that impressed Buzzard: the state’s young agent movement.

“There are certain states where the associations, the PIA, the Big “I,” have really worked on growing agents, on attracting young people into the business,” he says. “Some of those states, by the way, have schools that have insurance curriculums, such as Appalachian State down in North Carolina, or Ball State in Indiana. Kentucky has that model. I mean, they really recruit people into the business and it shows. There’s nothing I like more than seeing youth come into this business. So, that’s a huge attraction. If it were the only attraction, we wouldn’t go, but again, it’s one of those things.”

The number of pioneer agencies that sign up from a particular state has grown with each state Keystone enters. “The first state we ever entered was North Carolina; we had six there. Each state has gotten more. Ohio was 11, Kentucky 14,” he says.

Keystone has a simple method for deciding when it has enough partners in any state.

“We put an extreme amount of confidence in what our partners say. When they tell us this is enough, that’s enough. Why are you going to go against your partner’s interests? It makes no sense,” says Buzzard.

Kentucky is well underway and Keystone expects to add more Kentucky agencies, but Buzzard isn’t resting.

“I’ve started the process of looking in Tennessee. That’s probably been going on for six months.”

Once a Keystone member, always a Keystone member. A franchise partner can leave for any reason but, according to Buzzard, that’s not likely to happen.

“I think — well, I don’t think, I know — it’s what we’re proudest of — that in 27 years that Keystone has been in existence… in 27 years, nobody has ever chosen to leave.”

Each member pays an initial fee to join and then a monthly service charge based on its property/casualty premium volume.

In exchange, they get the market and carrier access that comes from aggregating their premium volume with other agencies. Partners also gain resources such as a producer development operation that helps them recruit and train new producers. There are about 10 divisions including ones for captives, programs, loss management and claims management that members can use.

Plus there is an added benefit.

“Once they get in and start interacting with the different divisions, and with their partners, they realize an intellectual capital, as we call it, that they never anticipated: that ability to tap into resources, opportunities, but just as importantly, into each other,” says Buzzard.

“There isn’t quite a question that can come up from a partner that somebody in Keystone hasn’t experienced, for better or worse, through the years. It really is a huge benefit when the partners can tap into other partners around the country and say, ‘How do you do this,’ or ‘How do you do that?'”